Definition of Deposits

This time we will discuss the meaning of deposits and their types, characteristics and benefits. Here’s the explanation …


Table of contents :

Definition of Deposits

Types of Deposits

  1. Time Deposit
  2. Certificate of Deposit
  3. Deposito on Call

Deposit Characteristics

  1. Minimum deposit
  2. Period of Deposits
  3. Fund Disbursement Rules
  4. Deposit Interest
  5. Low Risk
  6. Administrative Costs and Taxes
  7. Deposits can be guaranteed

Benefits and Benefits of Deposits

  1. From the Bank Side
  2. From the Depositor’s Side
  3. From the Community Side

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Definition of Deposits

Time deposit is a banking product in the form of a time deposit service that offers a fixed interest rate in accordance with the previous agreement.


Time deposit is a time deposit service product at a bank that promises higher interest than ordinary savings.


However, deposits and withdrawals can only be made at certain times.


The bigger the funds and the longer the deposit withdrawal time, the greater the interest the customer will earn.


However, if the customer wants to withdraw funds from his deposit earlier than the agreed time, the customer will be subject to a penalty.


In other words, this time saving product is more suitable for customers who want to invest their funds in the bank.


Although the returns are not as large as investing in stocks and commodities, time deposits tend to be safer and the returns are relatively stable.


To better understand the meaning of deposits, we can refer to the opinions of the following experts:


According to Lukman Dendawijaya


Time deposits are deposits from third parties to banks whose withdrawal system can only be made within a certain period of time based on an agreement between the third party and the bank concerned.


According to Muhammad Hassanudin and Habib Nazir


A deposit is a term deposit from a third party in the bank where the withdrawal can only be made in accordance with a specified period of time in accordance with the agreement between the third party and the Bank.


According to Banking Law No. 10 of 1998 article 1


Time deposit is a savings account that can only be withdrawn at a certain time based on the customer’s agreement with the bank.


Types of Deposits

definition of deposit


In general, deposits can be divided into three types, namely Time Deposits, Certificates of Deposit, and Deposits on Call. The following is an explanation of each;


Also Read: By-   Product Definition

  1. Time Deposit

Time deposits are types of deposits with maturities ranging from 1, 2, 3, to 24 months. Deposits are issued on behalf of individuals or institutions.


Interest on time deposits can be withdrawn every month according to the period of time. Interest withdrawal can be made in cash or non-cash (transfer of books).


These time deposits are generally issued in the form of giro bilyet in which the name of the owner is registered. Thus, these deposits cannot be traded freely.


  1. Certificate of Deposit

Certificates of deposit are forms of deposit issued by banks with shorter time periods, namely 3 months, 6 months and 12 months.


In general, a deposit certificate is issued without the name of the owner or holder so that it can be traded by the owner.


  1. Deposito on Call

Deposito on Call is a form of deposit used by depositors for depositors who have large funds and for a relatively short period of time the funds will not be used.


The time period is usually very short, which is 7-30 days. This form of deposit is issued in the name of the owner so that it cannot be traded.


Deposit Characteristics

Deposits of this type can be identified by observing several characteristics. The characteristics of deposits are as follows:


  1. Minimum deposit

Likewise, if you wish to open a bank account, there must be a minimum initial deposit made to the bank.


Each bank has a different policy regarding this initial deposit amount. However, in general the minimum initial deposit for time deposits is around IDR 5 million.


  1. Period of Deposits

As mentioned in the opening paragraph, savings have periods of fund deposition, starting from 1, 3, 6, 12, and 24 months.


This means that customers cannot withdraw their funds at any time, but must be in accordance with the deposit period agreed with the Bank.


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  1. Fund Disbursement Rules

Still related to point number 2, customer funds cannot be withdrawn at any time like regular savings.


So, when a customer selects the 24 month deposit period, the customer is required to wait 24 months to withdraw the deposit. If the customer wants to withdraw funds prematurely, he will be charged a penalty fee.


  1. Deposit Interest

In general, the interest rate on deposits is relatively higher than for ordinary savings. That is the reason why deposits are an investment product because the interest of the customers can be profitable.


In determining the deposit interest rate, the Bank must adjust to the policy of the Deposit Insurance Corporation (LPS).


  1. Low Risk

Deposits are deposits and low-risk investments because they are guaranteed by LPS with special conditions.


  1. Administrative Costs and Taxes

Deposits are taxable products so the profit from deposit interest will be deducted for tax expenses.


In addition, customers are also charged an administration fee. However, customers as a whole still benefit from these deposits.


  1. Deposits can be guaranteed

Deposits can be used as collateral when making a loan to a bank. However, only a few banks are willing to accept collateral in the form of deposits.


Benefits and Benefits of Deposits

Deposits have various benefits for many parties, both in terms of banks, depositors, and people who need capital. Referring to the definition of savings above, here are the benefits and benefits;


  1. From the Bank Side

The benefits of deposits from the Bank are support for the Bank’s business in collecting funds from the public.


The funds are used to increase banking business capital, particularly in the field of credit services by offering deposit interest rates.


  1. From the Depositor’s Side

The benefits of deposits that depositors get are the advantages of higher interest rates. In addition, depositors also receive credit guarantees and financial management assistance from the Bank.


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  1. From the Community Side

The benefit of the deposit for the community is that there is a capital assistance fund in the form of credit.


This capital can be used optimally in production activities so as to increase national income and community welfare.

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